United States: What The Canadian Air Cargo Decision May Mean For Possible U.S. Claimants

Last Updated: June 26 2019
Article by Sarah R. LaFreniere

The Supreme Court of Canada recently denied leave to appeal to defendants in the Canadian air cargo litigation on the question of whether absent foreign claimants ("AFCs") could be included in a putative litigation class. Leaving the judgment of the Ontario Court of Appeals ("ONCA") as the final word on the matter, it declares that foreign plaintiffs who are not present in Canada and do not affirmatively subject themselves to the jurisdiction of Canadian courts nevertheless can be members of an opt-out litigation class.1

The Canadian Air Cargo Class Action

The Canadian air cargo action was brought on behalf of claimants who purchased air freight shipping services either directly from a defendant or indirectly through a freight forwarder, for shipments to or from Canada. It was one of dozens of international competition cases related to allegations that a group of airlines conspired to fix air freight prices. Claimants to the Canadian action had settled with all but three defendants; Canadian prosecutors also obtained guilty pleas. Through the initial settlements, approximately 310,000 individuals were notified by mail of their ability to file a claim or opt-out of the settlements. Publication notice also was widely circulated. The settlements pertained to a global class which included AFCs, and the remaining defendants in the litigation did not object to the notice program.

Defendants filed a motion challenging Canadian jurisdiction over the AFCs. For the purpose of the motion, AFCs were defined as those purchasers who resided outside of Canada, entered contracts for shipping air freight services outside of Canada, suffered any alleged losses outside of Canada, and who had not expressly consented to the jurisdiction of the Canadian court.2 The motion judge held that the Canadian "substantial connection" test, which governs jurisdiction over foreign parties,3 should not apply to the AFCs, and instead considered whether including the class members would be appropriate given the principles of fairness, order, and comity.

The ONCA Decision

In overturning the motion judge, the ONCA applied the substantial connection test, holding that courts should consider three factors when deciding whether to assume jurisdiction over AFCs:

  1. whether there is a real and substantial connection between the subject matter of the action and Ontario, and whether jurisdiction exist over the representative plaintiffs and the defendants;
  2. whether there are common issues between the claims of the representative plaintiffs and the AFC; and
  3. whether the procedural safeguards of adequacy of representation, adequacy of notice, and the right to opt out are provided, thereby serving to enhance the real and substantial connection between the AFCs and Ontario.

The ONCA noted that the "framework provides the necessary safeguards to establish that jurisdiction properly exists, and ensures the protection of the values of order and fairness. Quite apart from that consequence, a positive result of this framework is that the objectives at the heart of class actions are served."4

In applying the test to foreign purchasers of air freight shipping services for shipments to or from Canada, the ONCA held: "The respondents' business in Ontario includes the sale of services that are the subject matter of the alleged conspiracy. As mentioned, part of the conduct in furtherance of the alleged conspiracy took place in Ontario, and there are shared common issues between the representative plaintiffs and the AFCs."5

The Canadian "Substantial Connection" Test and Foreign Defendants

The substantial connection test also governs whether a Canadian court can assume jurisdiction over a foreign defendant.6 The test asks:

  1. whether the court has presumptive jurisdiction due to a traditional mechanism of subject matter jurisdiction (e.g. carries on business in the forum or committed a tort in the forum);
  2. whether the presumptive jurisdiction is rebutted by showing there is no real relationship or only a weak relationship to the subject matter of the litigation and the forum; and
  3. whether the court should decline to exercise jurisdiction because the doctrine of forum non conveniens dictates that a more suitable forum exists.7

In addition, the plaintiff must show "good arguable cause" for the court to exercise jurisdiction over the foreign defendant. This is a low bar, but requires "something more than allegations of a conspiracy and reliance on a class action in another jurisdiction."8 Thus, in antitrust matters, the prohibition on anticompetitive practices is not limited to conduct that occurred in Canada.9

In most Canadian provinces courts can certify an opt-out litigation class which meets relatively modest requirements.10 Canadian courts, including the Canadian Supreme Court, have taken a permissive view of motions for class certification, making it difficult for defendants to defeat such motions. Where individualized issues may predominate in one aspect of the litigation, such as damages, Canadian courts often will bifurcate the litigation and certify the class for liability purposes only. This contrasts markedly with the U.S. system, where defendants are increasingly demanding that class plaintiffs provide a reliable economic mechanism which effectively measures damages at the class certification stage.

Conclusions

The Airia decision marks Canada as one of few jurisdictions where global class actions may be possible, and the ease of certifying a class could make Canada a very desirable place for possible plaintiffs to litigate. Provided they meet the terms of the substantial connection test, claimants whose claims have an ostensible tie to Canada have the ability to remedy their claims as a part of a class, with the inherent benefits of collective litigation. This is particularly helpful for foreign claimants with small claims that would be too costly to bring as independent actions. For foreign claimants whose home jurisdictions don't allow collective actions, this may open an opportunity to litigate where no opportunity may have existed before. While calls for collective redress are growing internationally, opt-out class action litigation is still limited to only a handful of jurisdictions. For claims that can be brought in either the U.S. or Canada, potential claimants might be wise to consider the option of participating in a Canadian litigation class.

That said, the Airia decision is not an open invitation to bring any claims in Canada, as both claimants and defendants must meet the requirements of the substantial connection test; essentially, the litigation must be tied to Canada in some way. In Airia, the ONCA found this was easily established because the air freight purchases at issue were for shipments to and from Canada. A more nuanced connection may be insufficient to meet the requirements of the test. For example, in the air cargo litigation, the Airia decision would not likely allow foreign claimants to be part of class with regard to their shipments which occurred wholly outside Canada. Claimants may also need to defeat a motion seeking to quash jurisdiction on the basis of forum non conveniens. Another hurdle is that the cost of notifying absent class members globally can easily exceed the potential damages. This was demonstrated by the $5 million notice program in Airia. These limitations may provide reasonable limits on foreign claims without ties to Canada that might overwhelm the Canadian court system.

From an access to justice perspective, commentators have lauded the Airia decision, likely with good reason. International claimants with ties to Canada now may have an additional venue to seek redress for harms they previously might not have been able to pursue.

This article was published as part of Hausfeld's Winter Competition Bulletin and in Lexology in February 2019.

Footnotes

[1] Airia Brands Inc. v. Air Canada, 2017 ONCA 792, available at http://www.ontariocourts.ca/decisions/2017/2017ONCA0792.pdf

[2] Id. 3.

[3] Van Breda v. Village Resorts Ltd., 2012 SCC 17.

[4] Airia Brands Inc. v. Air Canada, 2017 ONCA 792, 108.

[5] Id. 118.

[6] Vitapharm Canada Ltd v. F Hoffmann-LaRoche Ltd, [2002] OJ No. 298 at 95 (Ont. Sup. Ct.), affirmed [2002] OJ No. 1400 (Div. Ct.).

[7] Van Breda v. Village Resorts Ltd., 2012 SCC 17.

[8] Shah v. LG Chem, Ltd., 2015 CarswellOnt 5769 at15, 170 (Ont. S.C.J.)

[9] Vitapharm Canada Ltd v. F Hoffmann-LaRoche Ltd [2002] OJ No. 298 at 95 (Ont. Sup. Ct.), affirmed [2002] OJ No. 1400 (Div. Ct.).

[10] In Ontario, class actions proceed under the "Class Proceedings Act (SO 1992., c. 6), and can be filed with one representative plaintiff who will represent the class. To certify the class, the moving party must demonstrate that:

The pleadings or notice of application discloses a cause of action;

There is an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant;

The claims or defences of the class members raise common issues;

A class proceeding would be the preferable procedure for the resolution of the common issues; and

There is a representative plaintiff who would fairly represent the interests of the class.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions